Illegal imports admitted Parts 'dumped' in biggest such case in port's history

The former president of an auto parts company pleaded guilty yesterday in the biggest customs fraud case in the port of Baltimore's history and one of the most significant in the United States since the 1980s, officials said.

After a hearing in U.S. District Court here, Cleveland-based Sachs Automotive Products Co., which employs about 40 people, paid nearly $4.5 million in duties and fines for illegally "dumping" foreign goods.

The plea by Sachs' former president, Heinz K. Wolfmaier, capped a two-year investigation of the company by the U.S. Customs Service in Baltimore.

Authorities said that Mr. Wolfmaier, who stepped down earlier this year as president, falsified documents to conceal that the company was importing automobile bearings that are subject to stiff customs duties.

Sachs evaded the duty on more than 200 shipments of clutch-release bearings made in Germany and Japan over the two-year period, said Donald G. Turnbaugh, special agent in charge of the Customs Service office in Baltimore. Most of the shipments came to Baltimore, but the investigation extended to ports in Los Angeles; Detroit; Buffalo, N.Y.; and Richmond, Va.

The practice cost the government $2.3 million in duties and tariffs, said Assistant U.S. Attorney Ira Oring. The company made good that amount and also paid a $2.1 million penalty. Because the company worked out an agreement with prosecutors to settle the outstanding duties, it will not face criminal prosecution, he said.

The case was significant for the money collected and because the U.S. auto parts industry has been "decimated" by predatory trade practices, officials said.

"This may change the environment for dumping," said Acting U.S. Attorney for Maryland Gary P. Jordan. "This can send a signal."

The "anti-dumping" duty requires importers to pay 70 percent of the value on certain products to prevent foreign manufacturers from dumping the goods in the United States at less than fair market value.

Wolfmaier, a bespectacled 51-year-old described by his lawyer as a pillar of the affluent Cleveland suburb where he lives, declined to comment after his hearing yesterday before Judge Frederick J. Motz.

Wolfmaier faces up to two years in prison and a $250,000 fine when he is sentenced Nov. 5. He is still employed by Sachs, as a consultant, said his lawyer, Max Lauten.

Mr. Turnbaugh said that the case is unique also because it culminated with criminal charges. Typically, companies discovered to be skirting the duties receive warnings and are allowed to correct the practice, avoiding prosecution and penalties, he said.

But Wolfmaier blatantly continued the practice, officials said.

"He knew it, he had dealt with customs, and he deliberately caused it not to be adjusted," said Mr. Turnbaugh.

"It was clear there was an intention to violate the law," said Mr. Oring.

Even after documents were subpoened as part of a grand jury investigation, Wolfmaier created fictitious correspondence suggesting that the scheme was someone else's idea, Mr. Oring said.

Sachs Automotive issued a statement yesterday saying that the shipments that were investigated should not be subject to the anti-dumping duty. The company decided to pay the fine rather than pursue a protacted and costly lawsuit, said president John Edwards. "This settlement will resolve this dispute once and for all and will allow us to concentrate on serving our customers throughout the U.S," Mr. Edwards said.

The company is a division of Richtel and Sachs Industries Inc., which is a subsidiary of Fichtel & Sachs, A.G., a German corporation that is a key manufacturer of the bearings.

Special Agent Robert B. Trader, a former Baltimore City homicide investigator who has been with the customs office for nine years, reviewed more than 500 entries of Sachs import records, each containing dozens of documents. He then organized a team of 10 import specialists to review the records.

But he said the smoking gun was a letter he discovered in Sachs files instructing a Japanese supplier to falsify records about the type of goods it was shipping. If the instructions were not followed, Sachs would cease doing business with the company, the letter said.

Authorities at the Maryland Port Administration said Sachs Automotive Parts is one of hundreds of firms that receive cargo shipped through the port of Baltimore. They had no knowledge of either the company or Mr. Wolfmaier.

The port's Cincinnati-based sales agent, who maintains contact with Sachs Automotive, could not be reached for comment.